Partly allowed

Smt. Janaki v. Sri G S Aliver

Karnataka HC25 May 2022MFA/10136/2011

Case brief

AI extract

What is this about?

Two motor accident claim appeals challenged the Tribunal's order fixing liability solely on the vehicle owner due to permit violation. The court held that despite the insurance breach, the insurer must pay the award at the first instance with liberty to recover the amount from the owner, following Section 147 of the MV Act and Supreme Court precedents.

What did the court decide?

Appeals allowed in part directing the Insurance Company to satisfy the award amount at the first instance and then recover it from the owner of the offending vehicle.

Smt. Janaki Vs Sri G S Aliver — Insurance | Karnataka HC (2022)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 25^TH DAY OF MAY, 2022

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BEFORE

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THE HON'BLE MR. JUSTICE HANCHATE SANJEEVKUMAR

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M.F.A.NO.10136/2011 C/W M.F.A.NO.10138/2011 (MV)

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IN MFA NO.10136/2011

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BETWEEN :

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SMT. JANAKI, W/O ITHAPPA, AGED 65 YEARS, R/AT HOSAMANE HOUSE, NARINGANA POST & VILLAGE, BANTWAL TALUK-575 018

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… APPELLANT

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(BY SRI JEEVAN K., ADVOCATE))

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AND :

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SRI G.S. ALIVER, S/O SAYYAD, AGED ABOUT 34 YEARS, R/O PADUSHEDDE, MOODUSHEDDE VILLAGE, MANGALORE TALUK, REP. BY HIS G.P.A. HOLDER, SMT. SAMSHAD BEGAUM, AGED ABOUT 47 YEARS, W/O HAYAN SAHED, R/O TAUDUGOLI CROSS, NARINGANA VILLAGE, BANTWAL TALUK-575 018.

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THE BRANCH MANAGER, THE NEW INDIA ASSURANCE CO., LTD., BRANCH OFFICE, ESSEL CHAMBERS, III FLOOR, KARANGALPADY, KODIALBAIL, MANGALORE-575 003.

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... RESPONDENTS

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(BY SMT. HARINI SHIVANANDA, ADVOCATE FOR R2 APPEARING THROUGH V/C, R1- SERVED)

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THIS M.F.A IS FILED UNDER SECTION 173(1) OF MV ACT AGAINST THE JUDGMENT AND AWARD DATED:10.8.2011 PASSED IN MVC NO.92/2009 ON THE FILE OF MEMBER, MACT-III & II ADDITIONAL DISTRICT JUDGE, DAKSHINA KANNADA, MANGALORE, PARTLY ALLOWING THE CLAIM PETITION FOR COMPENSATION AND SEEKING ENHANCEMENT OF COMPENSATION AND ETC.,

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IN MFA NO.10138/2011

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BETWEEN :

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SMT. NAGAVENI, W/O UMESH BANGERA, AGED 34 YEARS, R/AT ALETHUR HOUSE, JODUMARGA, BANTWAL MOODA VILLAGE, BANTWAL TALUK-574 219.

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… APPELLANT

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(BY SRI JEEVAN K., ADVOCATE)

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AND :

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SRI G.S. ALIVER, S/O SAYYAD, AGED ABOUT 34 YEARS, R/O PADUSHEDDE, MOODUSHEDDE VILLAGE,

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MANGALORE TALUK, REP. BY HIS G.P. HOLDER, SMT. SAMSHAD BEGAUM, AGED ABOUT 47 YEARS, W/O HAYAN SAHED, R/O TAUDUGOLI CROSS, NARINGANA VILLAGE, BANTWAL TALUK-575 018.

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THE BRANCH MANAGER, THE NEW INDIA ASSURANCE CO., LTD., BRANCH OFFICE, ESSEL CHAMBERS, III FLOOR, KARANGALPADY, KODIALBAIL, MANGALORE-575 003.

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... RESPONDENTS

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(BY SMT. HARINI SHIVANANDA, ADVOCATE FOR R2 APPEARING THROUGH V/C, R1- SERVED)

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THIS M.F.A IS FILED UNDER SECTION 173(1) OF MV ACT AGAINST THE JUDGMENT AND AWARD DATED:10.8.2011 PASSED IN MVC NO.93/2009 ON THE FILE OF MEMBER, MACT-III & II ADDITIONAL DISTRICT JUDGE, DAKSHINA KANNADA, MANGALORE, PARTLY ALLOWING THE CLAIM PETITION FOR COMPENSATION AND SEEKING ENHANCEMENT OF COMPENSATION AND ETC.,

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THESE M.F.As. COMING ON FOR HEARING THIS DAY, THE COURT DELIVERED THE FOLLOWING:

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J U D G M E N T

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These appeals are filed by the appellants/claimants challenging the judgment and award dated 10.08.2011 in MVC.Nos.92/2009 and 93/2009 passed by MACT, Dakshina Kannada, Mangalore.

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Brief facts of the case are as under:

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On 28.10.2008 at about 1.30 p.m., when the petitioners were traveling in an autorickshaw bearing Reg.No.KA.19/7942 near Sarkudale in a village Naringana, Bantwal Taluk within the limits of Konaje Police Station the driver of the said autorickshaw drove the same in high speed, rashly and negligently and because the auto driver has lost control, the autorickshaw capsized on the left side of the road and as a result of this accident, they sustained certain injuries. They were shifted to K.S.Hegde Charitable Hospital, Deralakatte. The claimant in MVC.No.92/2009 took treatment as inpatient till 10.11.2008 and the claimant in MVC.No.31.10.2008 took treatment till 31.10.2008.

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The claim petitions were filed by the appellants/claimants seeking compensation. The Tribunal has partly allowed the claim petitions and awarded total compensation of Rs.50,080/- in MVC.No.92/2009 and Rs.10,000/- in MVC.No.93/2009 with interest at 6% p.a.,

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from the date of claim petitions. Being aggrieved by the same, the present appeals are filed before this Court.

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Learned counsel for the appellants/claimants submitted that the Tribunal has committed error in fixing the liability on the owner of the vehicle by exonerating the Insurance Company. Therefore, prays for interference with the judgment and award passed by the Tribunal insofar as fixing the liability is concerned. Learned counsel for the appellants/claimants further submitted that, even though, there is violation of terms and conditions of the insurance policy, an order of pay and recovery can be made by virtue of Section 147 of MV.Act and also in view of the law laid down by the Full Bench of this Court in the case of New India Assurance Company Limited Bijapur by its Divisional Manager Vs. Yallavva and Another reported in 2020 ACJ 2560.

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On the other hand, learned counsel for respondent No.2-Insurance Company submitted that here there is clear violation of terms and conditions of insurance policy as offending vehicle autorickshaw was riding in

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Bantwal Taluk and the accident has occurred, but permit was given only to ply within the Mangalore Rural area. Therefore, beyond the permitted area the accident has occurred. Hence, the Insurance Company is not liable to pay compensation. Further submitted that the Insurance Company is not liable to satisfy the claim amount at the first instance and then recover it from the owner of the offending vehicle. Therefore, submitted that an order of pay and recovery is not permissible. Therefore, submitted that the liability fixed on respondent No.1- owner of the offending vehicle is correct, which need not be interfered by this Court. Therefore, prays to dismiss the appeal.

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Learned counsel for respondent No.2Insurance Company has relied on the decision of the Hon’ble Supreme Court in the case of National Insurance Co. Ltd Vs. Chella Bharathamma & Others reported in AIR 2004 SCC 4882 and decision of this Court in the case of Sri Venkatesh Vs. IFFCO Tokio General Insurance Company Limited and Others in MFA.No.967/2017 .

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In the present case, the Tribunal has awarded compensation to the claimants, but fixed the liability on respondent No.1 – owner of the offending vehicle on the ground that the autorickshaw was plied in the area of Bantwal Taluk, upon which, there is no permit to the autorickshaw to ply in that area. Therefore, the Tribunal was of the opinion that autorickshaw was plied and met with an accident in the area other than the permit was given in the area. Therefore, with this observation, the Tribunal had fixed the liability on respondent No.1- owner of the offending vehicle to pay compensation.

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Admittedly, in the present case, the accident has occurred at the place called Sarkudale in a village Naringana, Bantwal Taluk. The appellants/claimants themselves stated the place of accident within the village area of Naringana, which comes within the area of Bantwal Taluk. Ex.R2 extract of permit is given in respect of autorickshaw to ply within Mangalore Rural Area. R.W.1-SDA attached to RTO, Mangalore, has given evidence that the permit was not given to autorickshaw to

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ply within Bantwal Taluk area, but permit was given to ply only in the area of Mangalore Rural. Therefore, it is proved that permit of the autorickshaw was given to ply within the Mangalore Rural area, but the accident has occurred in the limits of Naringana coming under Bantwal Taluk. Therefore, respondent No.2-Insurance Company has proved its defence as per Section 149(2)(a)(i)(c) of MV Act and it can avoid liability.

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But as per Section 147 of MV Act in the case of violation of any condition of insurance policy as the present case is also covered, even though, the Insurance Company has proved its defence, but still the Insurance Company is liable to satisfy the claim at the first instance and then recovery it from the owner of the offending vehicle who is insured. It is clearly stipulated in the judgment rendered by this Court in Yellavva’ s case, wherein their lordships were pleased to lay down the law, the applicability of pay and recovery at paragraph Nos.57 & 146 of the judgment, which reads as follows:

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“57. In another ruling in Rani V. National Insurance Co. Ltd., 2018 ACJ 2430

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(SC), again a three-Judges Bench was called upon to answer with regard to pay and recover order passed by the Tribunal. In the said case, the Insurance Company disputed its liability on the ground that the truck had no permit for being plied in the State of Karnataka as its permit was restricted to the State of Maharashtra. The Tribunal allowed compensation and directed the insurance company to deposit the amount, however the High court exempted the insurance company from liability but the Apex Court, in appeal, directed the insurance company to deposit the amount with liberty to recover the same from the owner of the vehicle. Dealing with the aforesaid aspect, at paras 6, 7 and 14, the apex Court again reiterated the earlier principles in Swaran Singh, 2004 ACJ 1 (SC) and modified the judgment of the High Court and restored the Tribunal's order directing the insurance company to pay and recover.

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146. i) Having regard to Section 149(1) r/w Section 149(7) whenever a case falls under Section 149(2)(a) and the same is successfully established or proved by the Insurance Company, as per the twin tests laid by the Hon'ble Supreme Court in Swaran Singh, nevertheless, the insurer or Insurance Company is liable to satisfy the award vis-àvis a third party and is entitled to recover from the insured. This is irrespective of, the policy being an Act policy in terms of Section 147 pertaining to compulsory coverage of risks of third parties and other classes of persons stated therein or a policy covering other risks by specific contract being entered into in that regard and where additional premium is paid by the insured i.e., a contractual policy.

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ii) The Insurer is liable to pay the third party and recover from the insured even if there is breach of any condition recognized under Section 149 (2), even if it is a fundamental breach (that is breach of condition which is the cause for the accident) and the insurer proves the said breach in view of the mandate under Section 149(1) of the Act. But, no such order can be passed against the insurer, if, on the facts and circumstances of a case, a finding is given by the court that the third party (injured or deceased) had played any fraud or was in collusion with the insured, individually or collectively, for a wrongful gain to themselves or cause wrongful loss to the insurer.

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iii) The Court can also fasten the absolute liability on the insurer, if there is any breach of condition which is enumerated under Section 149(2) of the Act or any other condition of the policy if the Insurance Company has waived breach of any such condition or has taken the special responsibility to pay by collecting extra premium by covering any type of risk depending upon facts of each case.

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iv) Thus, the rule of pay and recover is applicable in view of the mandate in Section 149(4) of the Act and even if there is a breach of the terms of the insurance policy, the insurer is bound to satisfy the judgment and award as if it were a judgment debtor, even if it satisfies the twin tests enunciated by the Hon'ble Supreme Court under Section 149(4)(a) of the Act.

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v) Before passing any order on the Insurance Company to pay and recover, the Court has to examine the facts and

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circumstances of each case and if it finds that the victim, injured or the deceased, in a particular case, was solely or jointly responsible for breach of such fundamental condition by playing fraud or in collusion with the insured, the Court may exercise its discretion not to fasten the liability on the insurer.

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vi) However, the court should not adopt the above guideline as a general rule in all cases, but only under peculiar facts and circumstances of each case and on giving appropriate reasons.

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vii) If the Insurance Company makes out a case under Section 149(2)(b) of the Act, then also the Insurance Company has to satisfy the award so far as third party is concerned, as it is the duty of the Insurance Company to indemnify the insured on the basis of the policy of the insurance and even when the contract of insurance itself is void, nevertheless the liability to indemnify the insured would arise and insurer is entitled to recover from the insured.

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viii) Thus, in a case where Section 149(2)(b) applies and the Insurance Company successfully establishes that the policy is void, in such a case also, the insurer is not absolved of its liability to satisfy the judgment or award as rights or obligations would flow even from a policy which is void vis-à-vis third party. In such a case, the insurer is not completely absolved of its liability, the insured would have to satisfy the award vis-à-vis the third party and recover from the insured the amount paid to the third party and may also have a right to seek damages from the insured.

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ix) The judgment of the Division Bench of this Court in Subramanyam, holding that a pay and recovery order cannot be made as there is no liability to pay or satisfy the award or decree in respect of a case falling under Section 149(2) is not correct. Hence, that portion of the judgment in Subramanyam, which states that if the case falls within the scope of Section 149(2) of the Act and the insurer is successful in establishing any of the defences as stated therein, it would be completely absolved of its liability to satisfy the award is also not correct and to that extent, it is held to be bad in law.

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x) Article 142 of the Constitution of India being a power granted under the Constitution only to the Supreme Court can be exercised in appropriate cases only by the Apex Court. Exercise of power under Article 142 by the Hon'ble Supreme Court in a particular case cannot be a precedent for other Courts and Tribunals to exercise such a power unless the same is indicated to be a precedent by the Apex Court.”

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Therefore, the order of pay and recovery can

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be made as per the principles laid down as stipulated above. Therefore, the Insurance Company has to satisfy the claim at the first instance and then recover it from the owner of the offending vehicle by following the procedure laid down at Paragraph No.13 in Chella Bharathamma’s case (stated supra).

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In Chella Bharathamma ’s case, the Hon’ble Apex Court also in the case of violation of not having permit has issued an order of pay and recovery and also laid down the procedure at paragraph No.13, which reads as under:

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“13. The residual question is what would be the appropriate direction.Considering the beneficial object of the Act, it would be proper for the insurer to satisfy the award, though in law it has no liability. In some cases the insurer has been given the option and liberty to recover the amount from the insured. For the purpose of recovering the amount paid from the owner, the insurer shall not be required to file a suit. It may initiate a proceeding before the Executing Court concerned as if the dispute between the insurer and the owner was the subject matter of determination before the Tribunal and the issue is decided against the owner and in favour of the insurer. Before release of the amount to the claimants, owner of the offending vehicle shall furnish security for the entire amount which the insurer will pay to the claimants. The offending vehicle shall be attached, as a part of the security. If necessity arises the Executing Court shall take assistance of the Regional Transport Authority concerned. The Executing Court shall pass appropriate orders in accordance with law as to the manner in which the owner of the vehicle shall make payment to the insurer. In case there is any default it shall be open to the Executing Court to direct realization by disposal of the securities to be furnished or from any other property or properties of the owner of the vehicle i.e. the insured. In the instant case considering the

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quantum involved we leave it to the discretion of the insurer to decide whether it would take steps for recovery of the amount from the insured.”

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Further the judgment rendered by the Division Bench of this Court in Venkatesh ’s case (stated supra) is not applicable in the present case for the reason that, in the said judgment, there is no discussion regarding pay and recovery. There is no reference or discussion as to whether in these types of cases the order of pay and recovery can be made nor not. But the question in the present case is that an order of pay and recovery can be made or not. Therefore, even though, respondent No.2 - Insurance Company is not liable to pay compensation, but by virtue of Section 147 of MV Act and also the dictum laid down in Yellavva ’s case (stated supra) the order of pay and recovery can be made. Accordingly, respondent No.2Insurance Company is directed to satisfy the claim amount at the first instance and then recovery it from the owner of the offending vehicle. The Hon’ble Supreme Court also in the case of Rani and Others Vs. National Insurance Company Limited and Others reported in (2018) 8

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SCC 492 at paragraph Nos.15 and 17 has discussed about

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pay and recovery, which reads as under:

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“15. We are of the view that the High Court has already granted more than just compensation amount to the legal representatives of the deceased (Satish). In that , even if the claim of the appellants regarding future prospects, additional medical expenses and additional interest amount was to be accepted, on the basis of the notional income of Rs.5000 (Rupees five thousand) per month, the question of awarding additional or further compensation amount to the appellants in MFA No.5874 of 2011 does not arise. The appeal, however, would succeed to the limited extent that the amount of compensation determined by the High Court shall be first paid by Respondent 1 Insurance Company with liberty to recover the same from the owner of the offending vehicle (Respondent 2 herein). We are inclined to allow the appeal to this limited extent, keeping in mind the exposition in Singh Ram V. Nirmala (2018) 3 SCC 800 and Pappu V. Vinod Kumar Lamba (2018) 3 SCC 208.

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(Emphasis supplied)

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17. In view of the above, the appeals are partly allowed by directing Respondent 1 Insurance Company to first pay the compensation amount to the respective claimants as determined by the High Court and Tribunal as the case may be, with liberty to recover the same from the owner of the offending vehicle, Respondent 2. The impugned judgment and order passed by

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the High Court stands modified to this limited extent.”

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With these observations, the appeals are liable to be allowed in part. Insofar as quantum of compensation awarded in MVC.No.92/2009 is concerned, the amount awarded is found to be appropriate and correct, which needs no interference.

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Therefore, with the aforesaid observations, both the appeals are allowed in part . The judgment and award dated 10.08.2011 passed in MVC.No.92/2009 and 93/2009 by MACT, Mangalore, is modified to the extent that respondent No.2-Insurance Company shall satisfy the award amount at the first instance and then recover it from respondent No.1 - owner of autorickshaw bearing Reg. No.KA.19/7942 by following the principles of pay and recovery.

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The entire amount shall be released in favour of the claimants.

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Smt. Janaki v. Sri G S Aliver

Case brief

What is this about?

What did the court decide?

Smt. Janaki v. Sri G S Aliver

Case brief

What is this about?

What did the court decide?

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